Is It Time to Buy Comcast?

Last night, Comcast (Nasdaq: CMCSA  ) reported a 2.9% gain in fourth-quarter revenue and a 136% jump in per-share earnings. Operating cash flow margin fell slightly over the same period, to 40.6% from 40.9%. Let's dig into the story behind these numbers.

What happened?
Cable is obviously Comcast's bread-and-butter, and it tastes good about now. Segment revenue improved 2.6% in Q4 to account for 94.4% of the company's fourth-quarter sales.

Subscriber growth helped to deliver those numbers. Net customer adds equaled 701,000 in Q4, with 2.94 million for the full year. In a difficult economic environment, this is nothing to sneeze at. Comcast helped spur growth in customers by delivering their 4G wireless broadband service and On Demand Online. But most importantly, it continued to grow its high speed Internet and digital voice services -- this helped offset customer losses in video and ad revenues.

What's next?
Programming revenue improved 5.2% in Q4 and could increase further in subsequent months, thanks to the company's acquisition of a majority interest in NBC Universal from General Electric (NYSE: GE  ) . Analysts are expecting Comcast to earn $0.40 per share on $9.1 billion in first-quarter revenue.

Comcast, meanwhile, is raising its annual dividend 40%, to $0.378 per share. Management also committed to continue buying back shares, as it illustrated by purchasing $300 million in Q4 alone. That's applause-worthy. Dividend increases and earnings growth usually go together, hand-in-glove.

Would you buy Comcast?

Metric

Comcast

CAPS stars (out of 5)

**

Total ratings

927

Percent Bulls

83.7%

Percent Bears

16.3%

Bullish pitches

145 out of 177

P/E Ratio

14.58

Expected 5-Year Growth Rate

12.48%

Competitors

DirecTV (NYSE: DTV  )

Dish Network (Nasdaq: DISH  )

AT&T (NYSE: T  )

Sources: CAPS, Yahoo! Finance.

No one knows if NBC will be the catalyst Comcast wants it to be. It never really worked for GE. Can it work here? Only if Comcast finds ways to profitably marry content and distribution, and in a manner that doesn't annoy network partners CBS (NYSE: CBS  ) and Disney (NYSE: DIS  ) , which owns the ABC television network.

But that's my take. Now it's your turn to weigh in. Would you buy Comcast at these levels? What were you expecting from Wednesday's earnings report? Make your voice heard using the comments box below.

Walt Disney has been singled out by our analysts at Motley Fool Stock Advisor and Motley Fool Inside Value. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the market-beating Motley Fool Rule Breakers stock picking team. He owned shares of Disney at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy says there's nowhere you go that you won't go in time. Whatever that means.


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